Defending the flex spending accounts

When Arthur Massei learned that the new health law would cut his tax break for buying medicine, he enlisted in a broad, well-financed corporate lobbying campaign to repeal the provision.

Massei is one of an estimated 30 million Americans who use pre-tax money deposited into employer-sponsored flexible spending accounts to purchase health care. Starting last month, the law bars them from using FSAs to buy over-the-counter products like cold remedies unless they get prescriptions. “This alone will cost me $150 a year in additional taxes,” said Massei, 51, a Manhattan talent manager.

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The repeal effort will move ahead next week when Sen. Kay Bailey Hutchison (R-Texas) and Rep. Erik Paulsen (R-Minn.) are expected to file bills that would allow FSA money to once again pay for OTC medications. The legislation also would eliminate the law’s $2,500 annual limit on contributions to FSAs, a provision that takes effect in two years. Currently, employers decide limits.

Some of the largest of the 500 companies that administer FSAs, as well as drugmakers and business groups, are organizing and funding the drive to change the law, which they say may reduce the number of people using these accounts. Among the strategies:

• To mobilize consumers, the Employers Council on Flexible Compensation, a trade group, created Save Flexible Spending Plans, a self-styled “national grass-roots advocacy campaign.” Its website, Savemyflexplan.org, is run by Hyde Park Communications, a Washington public affairs firm that in January added an online OTC Rule Complaint Center to collect individual stories of hardship and help consumers like Massei send complaints to Congress, as he has done.

• Executives from FSA companies will ramp up their Capitol Hill contacts with lawmakers in March when they come to Washington for a conference. “I and my chief compliance officer have had, over the last couple of months, probably over 100 meetings on Capitol Hill,” said Joe Jackson, chief executive officer of WageWorks, one of the largest FSA administrators.

• A New Jersey nonprofit is giving lawmakers an economic analysis showing that the over-the-counter restrictions will lead to $695 million annually in extra health care spending. The major reason: Since the law allows such purchases if patients get a prescription, some consumers will go to their doctors more often, and those physicians may end up prescribing more expensive drugs.

The report was put together by the Foundation for HealthSMART Consumers, which says patients should have a greater financial role in their health care decisions and gets part of its funding from consumer health product makers.

Campaign organizers say that since Savemyflexplan.org was created at the start of the health care debate in 2009, more than 96,000 e-mails have been sent to lawmakers. They expect a bigger backlash now that the OTC restrictions have kicked in.